2015

11 May, 2015 | ETNO

ETNO ThinkDigital Interview – Net Neutrality, Data Protection and more in the new world of the Internet of Things

Imagine ordering a pizza simply by pushing a button on the door of your fridge - On the occasion of the 2015 edition of the annual “Internet of Things European Summit” in Brussels, ETNO took the opportunity to talk to Francisco J. Jariego, Telefonica’s Director of Industrial IoT (Internet of Things) and Member of the Executive Committee of Telefonica’s I+D (Research & Development).

Many so-called Internet of Things (IoT) devices will have a very positive transformative impact on society. Can you give us an idea of the potential of the IoT and the impact it will have on lifestyles and businesses?

The potential is huge. Everybody agrees that connecting the physical world with sensors and analytics will transform our daily life and a wide range of industries. There is opportunity and disruption in semiconductors, components, hardware, networking and telecom. The IoT will eventually touch every sector of the economy. Figures vary wildly but we are talking about billions of new connected devices and trillions of dollars/euros in yearly economic impact.

Most current IoT applications in business or administration-led initiatives like smart cities are targeting cost savings, visibility, efficiency gains and risk reduction with only a small fraction focused on product innovation and new business models. We believe the true potential of the IoT resides in new services that harness incremental value from smart connected objects. The IoT allows buying and selling businesses to transform into rental businesses (Everything-as-a-Service), while cities, homes and cars will become platforms at the centre of further innovation.

My personal view is that it is futile trying to anticipate the services that we will see as many more things get connected. Let’s think of how the smartphone has changed our daily activity and the incredible number of possibilities that have opened up in a very short period of time, and let’s think that the number of possibilities will simply multiply with the IoT.

The European Commission’s main aim is to create a harmonised market in Europe. How important is the EU Digital Single Market (DSM) to the development of new digital services such as M2M, Cloud, e-health or mobile payments?

Digital services are an essential part of the DSM. M2M, Cloud, e-health or mobile payments are clear examples of services that are facing difficulties to reach mass market due to lack of harmonisation within the European Union and they will clearly benefit from a coherent DSM long term vision. DSM is about growth and scale, therefore, for these services the single market is a must.

The key challenge to reap the full benefits of a real Digital Single Market in Europe is to achieve the best pro-investment climate across the EU. This approach is the only way forward to recover Europe´s ICT world leadership and to provide EU citizens the best “world-class” connectivity and digital services.

There are no possible DSM benefits without clear and unequivocal pro-investment incentives, especially in digital infrastructures as they are the main “digital enabler” for innovation. The current vicious circle “No investor trust = No investment = No DSM benefits” should be tackled with a new policy that fosters operators’ ability to differentiate and that clearly and unequivocally sets a minimum regulatory intervention in the new network investments (NGA) and a pro-industry Net Neutrality policy supporting operators’ commercial flexibility and ability to innovate .

A Digital Single Market should be built around the creation of a much more investment-friendly and forward looking regulatory environment as a top priority. It should foresee a timely and thorough reform of the current regulatory framework for electronic communications. The objective of fostering network investments, in both fixed and mobile broadband, should be clearly indicated as the central objective of such a reform.

The Digital world is moving very fast. What Digital experience can consumers expect in five years and what should a successful telco do to keep up with future technological developments?

As we have more connected things, we are going to have new ways to interact with digital services, and in fact new ways to interact with and through the physical world. Today, most of our relation with digital services takes places through a browser or a smartphone application. In the future we will be able to interact with and through many more devices. Our everyday simplest objects may become part of the digital services.

For example, in Telefonica we have been testing the possibility to use a simple button--the magnet you put on the door of your fridge--to order a pizza, for example. And a few weeks ago, amazon announced a very similar concept --the dash button.

In the future, it will possible to use a wrist band to interact with your city in a seamless way, in a similar way to how Disney is using its MagicBand to transform the experience in Disney’s Parks. Or why not open a door just by knocking… even if there is no one behind the door!

For telecommunication operators, IoT is a huge opportunity. Telcos are in a good position because IoT is about connecting everything. But of course, operators cannot simply wait to reap the benefits. To be part of the new IoT revolution, it is key to take part and re-think how to provide connectivity in an attractive way. We need to make it very easy not only to connect a smartphone or a PC, but everything and for everyone developing a connected application, from a large product manufacturer to an entrepreneur working in a new service in a garage. IoT is key for the digital transformation of telcos. It also represents a huge opportunity for Europe - Let’s not miss it.

The US recently put forward rules on the Open Internet, while Europe is trying to finalise similar discussions with the TSM regulation. How could net neutrality rules impact the development of the IoT?

Quality of service differentiation is a very relevant feature for the industrial Internet and a moderate net neutrality regime, that allows the development of innovative services such as the ones needed in the current digitisation of traditional industries, will be essential. Critical applications in plant and machinery need a guarantee of high-quality network connections at all times. Accordingly, it is vital to be able to continue offering a high quality of service. Net neutrality should be defined in such a way that network operators have adequate freedom and incentives, and that innovation is not hindered. The competitive opportunities for connected manufacturing and products in the future are huge. Europe must take advantage of them.

A flexible and investment-friendly regulatory environment in Europe is necessary, with a strong focus on policies that promote dynamic outcomes such as investment and innovation instead of technology-biased over-regulation that can stifle innovation, raise costs, limit investment and harm consumer welfare.

Today's mobile devices contain identity information and collect huge amounts of data. How safe do you think public data is in the IoT and what impact do you think the proposed Data Protection reforms will have on IoT interoperability?

Users are increasingly concerned about their privacy and data security. The right answers need to be given to avoid a negative impact on the take-up of new communication services and products. While continuing to invest in consumer trust and confidence, industry should be in a position to meet consumer demands for new innovative services based on an intelligent use of data and so contributing to making citizens’ lives easier and better.

The future General Data Protection Regulation (GDPR), currently being negotiated by the Legislators, will be a unique opportunity to achieve a comprehensive, technologically-neutral framework, future-proof and flexible enough to allow the development of new services in Europe while maintaining Europe’s high standards in the protection of personal data. The main objective of the reform should be to achieve the right balance between protecting the fundamental right to privacy and ensuring that innovation can flourish within a truly digital single market. And we think this is possible. For that, some adjustments of the current Proposal are necessary to ensure a sound regulatory regime for the benefit of all, industry, customers and citizens.

It is of outmost importance to move away from sector-specific regulation in the field of data protection and network security as the best way to address the trust issue. The future GDPR is a step forward towards a technologically neutral framework and a real level playing field between all players irrespective of sector or geographic location. EU citizens’ personal data shall be granted the same level of protection, regardless of the geographical location or the economic sector of the service provider (“same services, same rules”). However, as long as the ePrivacy Directive coexists with the GDPR, there will be no real level playing field. Therefore, legislators should repeal the ePrivacy Directive and integrate it within the GDPR as soon as possible.

Francisco holds a Ph. D in Physics from Autónoma University of Madrid and has developed his professional career in the ICT industry, where he has participated and leaded many different research and innovation projects with focus in mathematical modeling and optimization, operations research, software development, information economics and R&D management and strategy.

He served as Director of Technology Strategy for Telefonica I+D from 2009 to 2012, being an active contributor to the definition of the current Telefonica R&D and innovation strategy that led to the creation of Telefonica Digital in 2011. Before his current position in Telefonica, Francisco was the Enablers & Technology Director at Telefonica Digital.